Cablegate: Egypt's Economy: August 24 Press Round-Up

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R 241141Z AUG 09
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UNCLAS CAIRO 001629

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STATE FOR NEA/ELA

E.O. 12958: N/A
TAGS: ECON EINV EFIN ETRD EAGR ENRG PGOV EG
SUBJECT: EGYPT'S ECONOMY: AUGUST 24 PRESS ROUND-UP

1. (U) The following are notable economic news stories that appeared
over the past week in the Egyptian press: --------------------------------------- Moody's Raises Egypt's Sovereign Rating ---------------------------------------

2.(U) Moody's raised Egypt's sovereign rating from "negative" to "stable" citing lower inflation, efforts to contain the budget deficit, and relative economic and financial sector stability. Moody's had downgraded its outlook for the Egyptian economy in mid-2008. In raising the rating, Moody's said the Egyptian economy was less affected by the global financial crisis than some other regional economies but noted that increasing debt and deficit levels, persistent inflation and unemployment remain continuing challenges (Al Mal, 8/20/2009). ------------------------- ---------------------------------- Public Sector Bank to Sell Stakes in Joint Venture Projects ------------------------- ----------------------------------

3.(U) Bank Misr, Egypt's second largest public bank, is preparing to sell stakes it owns in a number of joint venture projects, following approval of the Ministry of Investment. The Bank has started preparing the paperwork and will coordinate with the ministry the timing of the sales, originally scheduled to occur in the first quarter of fiscal 2009/10 (Jul.-Sep. 2009). The Ministry of Investment has said that the offering should be made at a time when the stock market is active, especially for construction stocks (Al Mal, 8/16/2009). ------------------------------ Polluted Water for Cultivation ------------------------------

4.(U) Independent and opposition newspapers continue to uncover new cultivated areas which are using untreated sewage water for irrigation. Official sources at the Ministry of Agriculture indicated that President Mubarak has asked the cabinet to prepare an immediate plan to eliminate such violations by allocating additional funds for development of irrigations projects in the older agricultural lands. The total cost of development of new irrigation systems in Nile Delta and the Nile Valley could amount to about LE 30 billion (US$5.5 billion)(Al Masry Al Youm, 8/20/2009). ------------------------- ------------------------------------ Egypt Signs US$2.3 Billion Oil and Gas Exploration Agreements ------------------------- ------------------------------------

5.(U) On August 16, Minister of Petroleum, Sameh Fahmi, signed six agreements for oil and natural gas exploration that are expected to bring in new investments amounting to US$2.3 billion (Al Ahram, 8/17/2009). ------------------------------------------- Plans for Mitigating Air Pollution in Cairo -------------------------------------------

6.(U) Amr Assal, Chairman of the Industrial Development Authority, announced the Authority's decision to relocate seven cement factories from Helwan (a suburb south of Cairo) to a new location in the Governorate of Beni Suef within the next three to seven years. He added that this plan still faces objections and concerns from industry experts and officials that will need to be considered during the implementation. The decision to relocate the polluting factories from Helwan to other areas away from urban districts was made by the Prime Minister in December 2008 (Al Masry Al Youm, 8/20/2009). --------------------------------------------- ------ Establishment of Investment Centers in Governorates --------------------------------------------- ------

7.(U) Minister of Local Development, Abdel Salam El Mahgoub announced that integrated investment centers will be established in each governorate by next year. He added that 22 new industrial zones will be established in the Delta and in Upper Egypt governorates. The ministry plans to provide an array of support to investors including technical assistance, licensing, and land allocation services. (Al Alam Al Yom, 8/19/2009). TUELLER

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